Trust's section 12AB registration rejection overturned after finding no profit-making activities or charitable purpose violations

ITAT Jaipur allowed the appeal against CIT(E)'s rejection of registration under section 12AB. The trust's registration was denied based on allegations that it engaged in profit-making activities contrary to charitable purposes under section 2(15). ITAT found no evidence that trust objects were profit-oriented, noting the deed specifically stated activities would not earn profit. Regarding alleged unauthorized activities, ITAT determined events were organized by an individual, not the trust, with no expenses incurred by the trust. CIT(E) erred in concluding trust activities violated its objects. The rejection order was set aside and CIT(E) directed to register the trust in accordance with law.

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Issues:
1. Rejection of registration under section 12AB of the Income Tax Act, 1961.
2. Rejection of approval under section 80G of the Income Tax Act, 1961.

Analysis:

Issue 1: Rejection of registration under section 12AB of the Income Tax Act, 1961:
The appeal was filed due to the rejection of the applicant trust's registration under section 12AB of the Income Tax Act. The rejection was based on the grounds that certain objects of the trust were deemed commercial in nature and that the activities did not align with the trust's objects. The appellant argued that the trust had never engaged in the commercial activities mentioned in the objects. The tribunal found that the Income and Expenditure Account statements did not reflect any profit-making activities as per the objects in question. The tribunal referred to legal precedents to establish that the trust's intention was not profit-making. It was concluded that the rejection was erroneous, and the order was set aside.

Issue 2: Rejection of approval under section 80G of the Income Tax Act, 1961:
The appeal challenged the rejection of the applicant trust's application for approval under section 80G of the Income Tax Act. The rejection was primarily due to the late filing of the application, as per the observations of the Learned CIT(E). However, subsequent to the order, the CBDT extended the deadline for such applications. The tribunal noted that the circular allowed trusts to file fresh applications within the extended period. As the applicant trust had the option to avail this remedy, the tribunal set aside the rejection under section 80G as well, considering the setting aside of the rejection under section 12AB. The matter was remanded to the Learned CIT(E) for a fresh decision in accordance with the law.

In conclusion, both appeals were disposed of, and the orders rejecting the registrations were set aside. The tribunal directed the Learned CIT(E) to proceed with the registration process in compliance with the law and provide a reasonable opportunity for the applicant to be heard.

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